CBI takes a big financial hit

The CBI has informed members it had slumped to an £8.3mn loss last year after a governance crisis and allegations of serious sexual misconduct against some staff caused members to flee, pushing the group close to collapse. Revenues fell 12.4 per cent to £20.6mn as the self-styled “voice of business” in the UK suffered the loss of subscriptions and commercial revenues after it was forced to suspend its events and other operations for several months.

The accounts for the year ended December 2023, sent to members on Tuesday, show the CBI spent £3mn on costs directly related to the crisis, including lawyers and consultants called in to respond to the allegations and overhaul its culture and governance. It spent £729,000 on severance payments as it axed staff to stave off collapse. It had an average of 255 staff in 2022 but the number was now about 160. The group could have stemmed losses more quickly by making more economics and policy experts redundant but judged that without them it would be less useful to corporate members.

The group lost about one-third of its members during the crisis but some have begun returning, including nine FTSE 100 groups. BT, National Grid, GSK, AstraZeneca, Schroders, Phoenix Group, KPMG, NatWest, Anglo-American and Centrica have all rejoined this year.   The organisation is focusing more on across the board issues rather than ones dealt with by sector specific trade associations.

The accounts included a warning from auditors over the CBI’s ability to continue as a going concern. It remains reliant on banks to fund its operations, but its lenders were aware of its financial modelling. Revenues would fall further in 2024 because many members had already paid their subscription fee for 2023 before quitting the group, meaning the financial impact would only be felt in 2024, he added. This further drop would be offset by lower legal, consultancy and redundancy costs in 2024, he said.

The CBI is confident it can survive in the long term, but ultimately there may be some rationalisation of business representation.

Lessons from HS2

Whatever one thinks of the HST2 project (and it has not been too popular scything its way through rural Warwickshire) any benefits would not be secured by terminating at Birmingham (or at Old Oak Common at the other end).

The Institution of Civil Engineers has produced an interesting report on the whole mess: https://www.ice.org.uk/news-insight/news-and-blogs/ice-blogs/the-infrastructure-blog/lessons-from-the-cancellation-of-hs2s-northern-leg

It's interesting because it does pay sufficient attention to the politics, in particular the turnover of senior ministers (nine secretaries of state for transport).  And, perhaps surprisingly for a report from an engineering organisation, it admits that it was over engineered.

Are disruptive protests being tolerated?

Policy Exchange thinks that the police are not handling 'disruptive' protests properly and the existing legal framework is not fit for purpose: https://policyexchange.org.uk/publication/might-is-right/

It's a point of review, but it should be noted that this think tank is on the tight of the political spectrum.

Reflections of an amateur psephologist

I haven't said anything about the election so far in part because even the professional election studies experts are finding it difficult to work out what is going on.   And as a public policy person, it is what happens after the votes are counted that interests me most.   There has been a conspiracy of silence from the main parties on the fiscal challenges facing the country.  

Even with over one million drawn into the highest tax bracket and over 6 million paying 40 per cent, the money isn't there to fix broken public services.   Hard choices will have to be made and the campaign has done nothing to alert voters to this fact.

With a volatile electorate, it is difficult to turn votes forecasts into seats won.   There are going to be some tight three side contests in which the majority may be in three or even two figures.  Consider the new seat of Bicester and Woodstock (where one of my granddaughters will be voting).   Poll figures suggest that the Conservatives, Labour and the Lib Dems are neck and neck at around 30/31 per cent.

Turnout will be crucial and it will certainly be down, but by how much?  A lot depends on whether undecided voters who normally vote Conservatives decided to revert to their traditional allegiance on polling day - I suspect quite a lot will.   However, many will not vote because of a growing disillusionment with democratic politics.   'They're all the same,' they say which the Greens and Reform clearly are not.

I think that we have reached peak Reform and that should help the Conservatives.   Farage's remarks about Putin called his question his judgment and his patriotism.  My gardener thinks that Putin is a great man, but that is not a view shared widely among gardeners or the general population.   The remarks made by a Reform canvasser are a further blow.

I really do not have much idea of what is happening in Scotland, but there will also be some knife edge contests there.   I think that the Scot Nats will retain about 20-25 seats.

My hunch is that there will not be a Tory wipeout and that Ed Davie will not become leader of the opposition, but that Labour will have a substantial and sufficient majority.   There is in fact no such thing as a super majority and having large numbers of under occupied backbenchers is simply a recipe for trouble.

If the Conservatives retain about 150 seats they may be able to avoid electing a head banger as their leader and form a sesnible opposition.

We can then focus on two other very important elections in France and the US.   The UK may be an outlier in having a centrist dad in charge.

BTW, the first election I covered in print was in 1959.  This is the first general election in which I have not been asked for an opinion by a newspaper, radio station or television.  However, there is a time when everyone should leave the stage: President Biden please note.

Conservatives whistling in the dark

All but one mayoralty taken except Tees Valley, where the victor did not identify as a Conservative; all council targets taken by Labour except Harlow; the Lib Dems winning more council seats than the Conservatives; a clear win for Sadiq Khan in London despite attempts by Laura 'Tory' Kussenberg to call it for the Conservatives.  Yet Andrew Mitchell was describing it as a 'mixed' set of results.

I have met Andy Street and he was an energetic focused individual who did a lot for the West Midlands.  He disassociated himself from Sunak and he is quite right to warn that going hard right is not a winning formula for the Conservatives.

A nine per cent Labour lead over Conservatives does not mean a hung Parliament as there will not be a 24 per cent other vote in a general election, but clearly Labour has some work to do with former Muslim supporters.

The Lib Dems are threatening the blue wall and won Dorset but a breakdown of the Devon and Cornwall PCC results suggests that they are not making headway in their former strongholds there, indeed Labour is doing better.

Congratulations to Count Binface on getting more votes than a fascist in London.   And why did the Conservatives run a head banger as a candidate when better alternatives were available?

On Thursday I kept an eye on the polling station opposite my partner's flat and the North Leamington elite were storming to the polls - although most voters seemed to be under 35 and over 60.   Labour held the Clarendon ward in the by-electiion with 52 votes and failed by 216 to win the Warwickshire PCC.

This is a government on its last legs.

The Royal Mail crisis

I have been running an online campaign locally about the deterioration of Royal Mail services which has attracted a lot of support from others.   I would often go ten days without a delivery and then fifteen to twenty items would arrive, some of them time sensitive.

I eventually managed to contact the office of the chairman/CEO's office at Royal Mail and to be fair they contacted me by phone and by email and I suspect that they gave local management a bit of a kick up the backside.   Deliveries have improved.

In response they said: 'I have contacted the Manager at Leamington Spa Delivery Office who has advised they have had issues with deliveries due to high sick absence running at 20% as well as twelve vacancies they have at present.  Your delivery round is not getting fully delivered daily and they are working on ensuring there is a rotation on the delivery round to ensure mail is delivered every other or third day.'  [Clearly this was not happening].

Royal Mail is actively recruiting for these vacancies and once these vacancies are filled and staff return to work there will be an improvement in deliveries.   [One person locally alleged that these vacancies were not advertised and they had tried to obtain a position without success].

On the phone I was told that 'no one wants to be a postman any more', but perhaps the pay and conditions need to be better for a job that takes you out in all weathers and can involve meeting unfrienly dogs.

Ofcom is currently running a consultation on the future of the universal delivery obligation.   Royal Mail points out that we are posting fewer letters (of course, they keep putting the cost up).   They would like to remove the Saturday delivery and deliver second class mail every other day.

Some argue that Royal Mail should never have been privatised, although the example of the Post Office and some local authorities suggests that public sector managers are not necessarily better.   My hunch would be us that it is not a sector that attracts the best managers.

I think thare are a number of solutions rathe than a further deterioration in service, although cynically it could be argued that poor service plays into Royal Mail's hands as an every other day service would be better than what I have been getting.

One solution would be to recognise that there is a social element to the service and pay a subsidy for it as happens in France.

Another would be to allow customers to pay for a better service.   I don't want to read my news magazines digitally and buying them from the newsagent would mean a loss of discount (for newspapers I get vouchers).  So I would not lose out much if I had to pay for a six day a week service.

More tax cuts will endanger public services

The Financial Times this morning has a story that Jeremy Hunt is considering further cuts in public expenditure to make room for tax giveaways to boost Tory election hopes.   As the Pink 'Un notes, Hunt's current plans to increase public expenditure by just 1 per cent would imply real cuts.

We are surrounded by examples of deteriorating public services in 'broken Britain'.  Many people cannot access NHS dental services and have had to extract their own teeth.  There is a huge backlog in the courts and buildings are in such a poor state that trials have been delayed.  Even well-run local authorities don't have enough cash to meet their statutory duties. 

Of course, Hunt is setting a trap for Labour who, apart from some modest increases, have pledged not to increase taxes.   The tax burden is at its highest for a very long time, but it is very difficult to see how needed improvements in public services can be funded.

Unfortunately, voters can't have it both ways: lower taxes and better public services.  With the economy in a technical recession and generally flat lining there is no medium-term path out through growth.  As a report from Goldman Sachs make clear, Brexit has hit GDP.

It is possible that interest rates will start to fall and this will reduce the very high cost of servicing the public debt.  About a quarter is index linked and new gilts are being used at higher rates than previously.

Kicking the can down the road doesn't help with the the PFI contracts favoured by New Labour coming home to roost with schools having to over pay for maintenance.

Who would be a decision-maker?